Sunday, April 30, 2017

Calculate VAT on MRP

Applicable to : Tally ERP 9 Release 5.5.6

Recently, we noticed some issues while using the "Calc VAT on MRP" feature. We posted two SALES INVOICEs in Tally, the details being as follows :

Sale Invoice 1

Stockitem Master Name: Item CX
MRP : Rs 250.
Calc VAT on MRP : Yes
MRP Incl of VAT : Yes
Is Inclusive of duties and taxes : Yes
VAT : 5%

Sale Voucher
StockItem Name : Item CX
Qty : 1
Rate : Rs 238.09 (Auto computed in Tally)
Amount : Rs 238.09 (Auto computed in Tally)
VAT Amount : Rs 11.91 (Auto computed in Tally)

Sale Invoice 2

Stockitem Master Name : Item DX

MRP : Rs 250.
Calc VAT on MRP : Yes
MRP Incl of VAT : Yes
Is Inclusive of duties and taxes : Yes
VAT : 4%
Addl Tax : 1%

Sale Voucher
StockItem Name : Item DX
Qty : 1
Rate : Rs 237.98 (Auto computed in Tally)
Amount : Rs 237.98 (Auto computed in Tally)
VAT Amount : Rs 9.62 (Auto computed in Tally)
Addl VAT Amt: Rs 2.40 (Auto computed in Tally)

Remarks
As it can be seen, the VAT amount is incorrectly computed when we specify VAT + Addl Tax in the StockItem Master and "Calc VAT on MRP" is enabled.

VAT 5% => Rs 11.91 (Correct VAT in Sale Voucher 1)
VAT 4+1% => Rs 12.02 (Incorrect VAT in Sale Voucher 2)

Workaround
A workaround is to disable the "Calc VAT on MRP"  and enable "Is Inclusive of duties and taxes" only in the StockItem Master. This way, VAT is computed correctly in both the situations as mentioned above.

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